Although the European Union is on track to meet its climate targets, there’s one area where it has been falling behind – energy efficiency.

The European Commission, Parliament and President agreed on a legislative proposal to fix that, which now needs approval from member states.

The legislation requires greater efficiency from utilities. The original proposal called for energy savings equivalent to 1.5% of annual sales, but after negotiations, that was reduced to closer to 1%.

Then Britain introduced an amendment that would take account of savings from past and future years, effectively exempting it from additional action, reports Reuters.

Europe’s 2008 20-20-20 plan targets by 2020: reduce emissions 20% below 1990 levels, increase renewable energy and efficiency 20%.

All the targets are binding except for energy efficiency – the fact that it’s voluntary is the main reason it’s not being met.

They are on track to reach a 10% increase in efficiency; the new plan will still likely only reach 15%.

Denmark, which led the debate, argues that making a deep commitment to efficiency would play a major role in reducing the region’s debt by needing to import fossil fuels, while creating jobs in building retrofits and cutting greenhouse gas emissions.

Expenditures on imported energy rose from 1% of EU GDP in 2009 to 3.9% in 2011, reports Reuters.

“We are changing the business model. The future business model of energy companies would also be energy efficiency service business. This is about a cultural business model change and that is why the fight is so brutal,” Claude Turmes, a member the Green Party, a lead negotiator, told Reuters.

Opponents say there’s no money for upfront spending and that it would prevent growth.

In 2001, the EU updated its plan for energy efficiency, focusing on buildings, tranportation and industry. It requires all new buildings to be “near zero energy” by 2020.

To compensate for the diluted results of the negotiations, there’s a move to include renovations of buildings, which account for 40% of energy use. But that too got diluted with a list of building types that would be exempt, such as those owned by the military.

Original Article on SustainableBusiness.com